Public Bill Committee

[John Robertson in the Chair]

New Clause 8  - Non-public sector provision of services

‘Arrangements made by the Secretary of State, in accordance with which functions are conferred on officers of non-public sector providers of probation services, must include provisions requiring that—
(a) contracts for the provision of probation services from such providers be published;
(b) the economy, efficiency and effectiveness of such providers in discharging relevant functions be subject to National Audit Office assessment;
(c) companies under investigation for fraud may not bid for, nor be part of consortia bidding for, a contract for the provision of probation services, and
(d) companies with the status of prime contractor under the Work Programme may not bid for, nor be part of consortia bidding for, a contract for the provision of probation services.’.—(Mr Llwyd.)

Brought up, read the First time, and motion made (this day), That the clause be read a Second time.

Elfyn Llwyd: It is a pleasure to see you back in the Chair, Mr Robertson.
I was developing an argument about making public the contractual arrangements between the Government and suppliers. The potential for variations in standards of quality are far more likely than when the probation service itself supervises all offenders. Transparent contracts would allow the public to know which interventions were most effective and which companies have the best impact on reconviction rates. We would all agree that that would be helpful, but I do not anticipate the Minister capitulating completely in the debate. None the less, it is important that we should have it.
Contracts should be subject to inspections by the National Audit Office. The quality of inspections is very high and they have contributed to raising standards in many sectors in the past. It should be possible for National Audit Office staff to conduct both announced and unannounced inspections of the 21 proposed private contractors.
I will refer to subsection (c). Two major security companies who will be interested in bidding for probation work are currently under investigation by the Serious Fraud Office for allegedly falsifying tagging contract data. I understand only one is bidding currently. It is alleged that financial claims were made for offenders who were not in the UK; who were in prison; or whose period on the tag had been completed. The inquiry is likely to take some time. In the meantime, it has been declared that three jails in Yorkshire, which were to pass to Serco, will now stay with the state because of concerns about fraud allegations and investigations.
In the past, one of the companies has been heavily criticised for its poor performance in providing security at the Olympics. On other occasions, complaints have been made about the standards that the companies had adhered to in prisoner escorts to and from court and jail. Recently, translation services, which were privatised, were heavily criticised on the grounds that targets had been missed time and again, and they continue to be missed. On occasions, interpreters did not turn up at court or the interpreter sent had proficiency in the wrong language, which is always a bad start on a morning in court.
Public confidence is arguably eroded if companies that are under investigation and liable to huge fines are allowed to compete for highly sensitive probation contracts. The contracts involve the supervision of thousands of offenders, many of whom have been convicted of offences of violence, burglary, violence against the person, and sexual offences, and many are gang members. The potential for data being lost or wrongly recorded and for breaches being unnecessarily taken or missed is clearly possible.
Above all, the companies must be ones in which the public have confidence. We must be confident that they are honest and truthful. That is perhaps obvious, but it is a crucial element that seems to be missing in the current debate.
Just over 12 months ago, the unpaid work contract for Greater London was awarded to Serco. There have been a range of concerns. It appears workshops have been closed, therefore shutting down placements for women and for high risk offenders. We referred this morning to the patchwork provision for women, and this is an example of where, once more, women offenders have been badly affected. Offenders have recently complained to a probation office in north-west London that no supervisors have been available on their worksite. It is alleged that rival gang members have been on the same transport to and from placements. It was also alleged that on one occasion, a known sex offender was on the same placement as a person younger than 17 years old. There are numerous complaints and allegations of telephone calls not being answered.
There are issues of quality and confidence. Surely, if a company is under investigation for serious fraud, any invitation to tender for further state contracts should be put on hold until at least the fraud investigation is finalised either way.
Finally, regarding proposed new subsection (d), it appears that the Government are trying to align the transforming rehabilitation areas with Work programme regions rather than the police, local authority and court coterminous boundaries, which, one would have thought, would have been the right approach.
Most short-term prisoners will be expected to report to the Work programme straight from prison. If a private company running the Work programme was also successful in bidding for probation work, there would be a clear conflict of interest. The company would cover two huge Government contracts and there would be no obvious boundaries. That would build up local monopolies, and the same company could be running Work programmes, court escort services, prisons, tagging contracts and supervising offenders.
There would be a conflict if the company had, in law, to breach an offender and return him or her to prison, while that person was participating in, for example, the Work programme. There would also be a conflict if the person being tagged or someone on the Work programme was breached and sent to prison, because the company would risk losing two payments. The same would be the case if the person who was being tagged was forced, because of a breach, to go to a prison that was not run by the same company. As the tagging company would face financial loss, it might be reluctant to breach.
There will clearly be a financial interest in the companies sharing back office functions to save costs. There would also be an incentive, if an offender was referred to the Work programme, not also to offer the literacy or drug abuse programmes in order to save costs.
There are enormous commercial risks here: perverse incentives not to breach; the risk of local monopolies building up; and action being taken that is not in the interests of public protection and, crucially, public safety. Those are the remarks I have to make in support of new clause 8. I do not anticipate that the Minister will capitulate completely, but I would be interested to hear what he has to say, albeit limited by the gagging order about the various companies and the real detail that we need to hear.

Jeremy Wright: It is a pleasure to see you back in the Chair this afternoon, Mr Robertson, for what we might describe as the home straight of this Committee.
The right hon. Gentleman’s new clause covers a number of different things. I shall start perhaps with its less controversial parts. I can confirm that the Government already plan to publish contracts for the delivery of services to low and medium-risk offenders. More widely, organisations looking to bid for public sector contracts are already aware that if they are awarded a new Government contract, the resulting contract between supplier and Government will be published. In some circumstances, limited redactions will be made to some contracts before they are published to comply with, for example, existing law and with the protection of national security and personal privacy.
In addition, the Government plan to make available in the new year draft versions of the future contracts for probation services. I hope that the right hon. Gentleman will be reassured by that.
Likewise, I reassure the right hon. Gentleman that the Government have already made it clear in the operating model we published in September that the National Audit Office may also require access to CRCs’ records and documents where there is a need for public assurance. That will be reflected in the contracts.
As the target operating model set out, the system will be regulated through a combination of independent inspection, audit and non-account management of the CRCs. The inspection function will be provided by Her Majesty’s inspectorate of probation, which will inspect the service across the national probation service and contracted sectors. Inspection findings and recommendations will be followed up through account management and may inform decisions about the application of remedies. An audit function will provide assurance that reported data is accurate. CRCs will be contractually obliged to develop their own internal audit processes that they will share with NOMS. NOMS will also audit CRC delivery and will use external audit to examine elements of service delivery where appropriate.
Turning to the other parts of the new clause, as the right hon. Gentleman anticipated I would say, we have already spent a considerable time discussing whether particular companies under investigation for fraud can be prevented from bidding in the competition. I do not propose to repeat what I said to the Committee on that, but let me reiterate that I understand why concerns have been raised in the House and in the Committee about this. As I have previously stated, both the Justice Secretary and I are determined to ensure the integrity of future contracts in order to deliver value for money for the taxpayer. The Ministry of Justice is currently following a proper procurement process and will do so in future competitions. It is this process that should rightly be used to determine who can bid for contracts and who the future providers of services should be.
The right hon. Gentleman’s new clause seeks further to limit who can bid for contracts by excluding those organisations that are prime providers for the Work programme. The new clause is technically flawed and would not, in fact, have the effect of excluding either companies under investigation or Work programme providers from the bidding process. This is because it refers to “arrangements” made by the Secretary of State—that is, in effect, contracts—and requires that those contracts should be the mechanism to prevent certain organisations from bidding; but, of course, those contracts would not exist at the point when the competition for services is under way. Even if the presumed intention of the new clause were enacted in relation to Work programme providers, it would reduce the diversity of the market of rehabilitation providers.
The Work programme is not something we need to get into at the moment. We may not agree on its merits and demerits, but on the right hon. Gentleman’s specific concern about the possible conflict of interest around breaches, as we have discussed before, it is important to bear in mind that decisions on breaches will be taken not by contractors but by the national probation service. That offers the reassurance that he is looking for.
We seek to open the market up to a variety of rehabilitation providers in order to bring in greater innovation in the support provided to offenders, helping to deliver a real reduction in reoffending rates.

Jenny Chapman: On the point about the decision being made by the national probation service—which is correct—in answer to the point about there being a perverse incentive, is there not a perverse incentive around the passing on of the information in order for that decision to be made in the first place? Can the Minister anticipate that being a problem?

Jeremy Wright: We discussed it this morning and the reality is that the provider of rehabilitation services will be most interested to make sure that the person they have responsibility for does not reoffend. They will want to use a variety of different levers to do that. One lever might be the intervention of the national probation service and, through the NPS, the courts, in order to restrict the opportunity that such an offender might have to reoffend. I do not believe that that perverse incentive exists in terms of making an original recommendation back to the NPS. It is crucial that the NPS has the final decision, in order to eliminate any possibility of such perverse incentives.
I was talking about the need to ensure that we have a diverse market in relation to providers of rehabilitation. To limit those who can even bid to deliver services in the way that the right hon. Gentleman suggests will potentially prevent organisations that have the experience needed to deliver these vital services to offenders from being able to do so. As we have discussed, we want to ensure that the market is broad and diverse. That is why we have taken steps to ensure that the competition is open to those who are best placed to tackle re-offending; steps such as contract package areas of various sizes, funding to help the voluntary sector and mutuals to compete, and a registration process for the smaller providers. I hope that those reassurances are sufficient for the right hon. Gentleman to withdraw this new clause.

Paul Goggins: The Minister has explained to my right hon. Friend why he is not prepared to accept subsection (c) as it stands. By not accepting that subsection, a company under investigation for fraud will be able to continue with its bid in conjunction with other organisations. Will he confirm—I do not underestimate the legal complexity of the situation that he and the Justice Secretary face—that, if the bids are concluded and the contracts are awarded to companies that are subsequently found to have been guilty of fraud, there will be a break clause in that contract to ensure that it ends immediately?

Jeremy Wright: As I said, draft contracts will be available for everyone to see, hopefully in the new year. In those contracts, it will be clear that if there are contractual failings, there will be real consequences. We discussed earlier that one of those consequences could be the ending of the contract. It is hard to see how the scenario he describes would not count as a significant contractual failure. I think that that gives him reassurance on his point. I invite the right hon. Member for Dwyfor Meirionnydd to withdraw his new clause.

Elfyn Llwyd: I am comforted by what the Minister said about subsections (a) and (b), although not subsections (c) and (d). The new clause was probing and intended to draw out the debate. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

Jeremy Wright: On a point of order, Mr Robertson. On behalf of all members of the Committee, I thank you and your co-Chair, Ms Dorries, for the wise and purposeful way in which you have guided our deliberations. We are grateful. We are also grateful to your eminent Clerks, who have given sage advice throughout, and to Hansard and the Doorkeepers, who have enabled the Committee to operate so efficiently throughout these two and a half days, more or less, of consideration.
We have had extensive and good debate on all parts of the Bill, as well as on many provisions that are not in the Bill. We have managed to do that with a little more than two and a half hours remaining of the allocated time. I am grateful to all members of the Committee. Particular thanks go to my hon. Friend the Member for Bexleyheath and Crayford and his fellow Whip the hon. Member for Kingston upon Hull East. They have done their jobs extremely well. I also thank my hon. Friend the Member for Ilford North for his help and assistance. I thank the hon. Member for Darlington and the hon. Member for Hammersmith, who we miss deeply today, for all their help and assistance in presenting the Opposition’s case so succinctly and well. I thank all members of the Committee for their attention and diligence in scrutinising the Bill.

Jenny Chapman: Further to that point of order, Mr Robertson. I thank you for your helpful and fair supervision of the Committee. I thank the Doorkeepers, the Clerks and Hansard. I thank my hon. Friend the Member for Kingston upon Hull East for his encouragement and his relaxed attitude to whipping the Committee. I thank my hon. Friend the Member for Stockton North for his thorough speech on clause 1. It was an excellent use of local examples. My hon. Friend the Member for Rotherham made some outstanding contributions. I can hardly believe that she has been here for a little over a year. When they do those “Ones to watch” lists—I have never been on them—she will, or should be, on them.
When my hon. Friend the Member for Hammersmith agreed to lead for the Opposition on Thursday, I said that I did not think that it was all that contentious, and he said, “Well, it is now.” I gather that it went according to his plan. I also thank my right hon. Friend the Member for Wythenshawe and Sale East for his sage advice and his considered and well informed opinions. He has become a bit of a go-to person on these issues for me, and I know that that is the case for many others, too.
I thank the right hon. Member for Dwyfor Meirionnydd—I hope I pronounced that more or less correctly; I have been practising—for his exceptional contribution and his knowledgeable, experienced and thoughtful insights, as well as the comradely manner in which he has worked alongside us in Committee.
I also mention the hon. Member for Solihull, who I know takes a great deal of care in her contributions. She made some interesting interventions and has clearly been thinking on some of the conversations she has been having with probation officers. I hope that she continues to reflect on those conversations. I also thank the Minister for his good humoured, careful responses. He has been a bit too careful for me on occasions, but we look forward to coming back to do this all again on Report, which I understand will be some time after Christmas.

Elfyn Llwyd: Further to that point of order, Mr Robertson. I associate myself with what the hon. Member for Darlington has just said. This Committee began in a situation where there were two warring factions and, in fact, we conclude with two warring factions, but at least the discussion was not exactly warlike. It has been an interesting, thought-provoking process and—if I may respectfully say so—an example of how a Public Bill Committee should be conducted, under your able chairmanship and that of your colleague, Ms Dorries.
There have been deep divides, yet the debates have been held in a proper spirit. If I may speak briefly about the Minister as well, he has tried to engage with each debate as they have come along. That is not always the case, alas, with some Ministers. With those few concluding remarks, it would be overstating it to say that being on the Committee has been a pleasure—let us not get carried away—but it has been an enriching experience.

John Robertson: I thank everyone for their kind words on behalf of the co-Chair and myself.

Bill, as amended, to be reported.

Committee rose.